Richard C. Longworth, senior fellow at The Chicago Council on Global Affairs, contributes his knowledge and ideas about issues that affect the Midwest.

Thursday, April 11, 2013

Electrolux Comes and Goes -- A Midwestern Story

This week’s posting calls attention to two good stories from NPR on manufacturing in America, where it’s going and how this affects the Midwest. Both focus on Electrolux, the global corporation based in Sweden which has had an outside impact on industrial life in the Midwest.

Both stories are by a reporter named Andrea Hsu. The first, which is good news, more or less, tells about the opening of an Electrolux factory in Memphis, Tennessee. It will create a lot of jobs, 1,200 of them, most of them shifted from a plant near Montreal, in Canada. The job descriptions which Electrolux has posted on the web don’t give salaries, but Hsu says they’ll be about one-third less on average than the $19 per hour it’s been paying workers in Montreal.

Memphis and Tennessee offered Electrolux a package of $188 million in subsidies and incentives (also called bribes) to move to Memphis. That works out to about $156,000 per worker for each job created. That figure is about five times the average wage. In other words, Tennessee taxpayers have picked up the first five years of Electrolux’s payroll there.

We’ve done some work on Electrolux elsewhere in the Midwest, where it’s been a presence for years. When I was researching my book, Caught in the Middle, I was in Greenville, Michigan, on the day that Electrolux closed the oldest and biggest plant in town, creating wounds that have yet to heal. This is what I wrote then.

Greenville offered Electrolux bribes of $74 million to stay, but it wasn’t enough. The 2,700 workers there made an average of $23 per hour, more than the workers in Montreal, about twice as much as the potential workers in Memphis, a whole lot more than the workers in Juarez, Mexico, which is where their jobs went.

Hsu also went to Webster City, Iowa, a blue-collar town north of Des Moines, where Electrolux was again the oldest and biggest employer in town, until it shut up shop and moved its 2,700 jobs, also to Juarez. Once again, those jobs paid $23 per hour – until they weren’t there anymore. Here’s what she wrote:

Greenville managed to land a solar panel factory, promising some 1,200 jobs, but Chinese competition and a dip in the market killed that factory. At least Greenville worked hard to find a future. Webster City still seems stunned, to judge by Hsu’s story. I’d spent some time in Webster City while Electrolux was still there, and again in 2009, after the Swedish company announced the closing. The plant actually shut two years ago, but Hsu reports that, despite a couple of false starts, it’s still looking for a future.

There’s no moral here, other than that we’re living in a global economy dominated by global corporations. Electrolux, like other businesses, exists to make profits and seek maximum efficiency. It has nothing against Greenville or Webster City or even Montreal, but it also has no ties to these places, unlike the locally-based corporations that once dominated Midwestern industry. If Memphis is smart, it will assume that Electrolux is just passing through and will be planning now for the day when it leaves town.

The Global Midwest Initiative of The Chicago Council on Global Affairs is a regional effort to promote interstate dialogue and to serve as a resource for those interested in the Midwest's ability to navigate today's global landscape.